Trump’s Company Seeks to Ease Financial Crunch as Coronavirus Takes Toll

Trump’s Company Seeks to Ease Financial Crunch as Coronavirus Takes Toll


All over the country, businesses large and small are seeking breathing room from their lenders, landlords and business partners as they face the financial fallout from the coronavirus crisis.

President Trump’s family company is among those looking for help.

With some of its golf courses and hotels closed amid the economic lockdown, the Trump Organization has been exploring whether it can delay payments on some of its loans and other financial obligations, according to people familiar with the matter and documents reviewed by The New York Times.

Representatives of Mr. Trump’s company have recently spoken with Deutsche Bank, the president’s largest creditor, about the possibility of postponing payments on at least some of its loans from the bank.

And in Florida, the Trump Organization sought guidance last week from Palm Beach County about whether it expected the company to continue making monthly payments on county land that it leases for a 27-hole golf club.

The discussions with Deutsche Bank and Palm Beach County are preliminary, and it isn’t clear whether Mr. Trump’s company will be able to delay or reduce its payments, according to people briefed on the discussions.

“These days everybody is working together,” said Eric Trump, the president’s son, who helps manage the family business. “Tenants are working with landlords, landlords are working with banks. The whole world is working together as we fight through this pandemic.”

The Trump Organization’s requests put lenders and landlords in the awkward position of having to accede or risk alienating Mr. Trump.

Like the broader hospitality industry, the Trump Organization is poised to take a significant hit from the coronavirus crisis. In recent weeks, the company has temporarily closed its hotel overlooking the Las Vegas Strip, cut staff and services at its hotels in New York and Washington and largely shuttered its golf clubs in Florida and New Jersey. It also closed the Mar-a-Lago club in Florida, which at this time of year would normally be serving as the “winter White House,” as Mr. Trump likes to call it.

Yet the company, which has a portfolio of more than a dozen golf clubs and luxury hotels in the United States and overseas, has opted to keep some of its properties open absent government orders to close, in contrast with the widespread shutdowns by some larger hotel chains.

Other companies may be able to tap into a $500 billion rescue fund that will be administered by the Treasury Department. But the economic bailout package, which Mr. Trump signed into law last week, specifically barred the president and his family from access to that money.

Late last month, Mr. Trump’s representatives contacted their relationship managers in Deutsche Bank’s New York private-banking division, which caters to wealthy customers. They wanted to discuss the possibility of delaying payments on some of the hundreds of millions of dollars of outstanding loans that the Trump Organization has from the bank, according to a person briefed on the talks. The discussions are continuing.

Around the same time, Ed Raymundo, a Trump Organization executive in Florida, emailed and called Palm Beach County officials to discuss whether they planned to keep collecting monthly rent payments on land that Mr. Trump’s company leases from the county, according to people familiar with the talks.

The Trump Organization has a small amount of debt compared with other major real estate companies, which could weigh in the company’s favor as it seeks accommodations.

Deutsche Bank has lent Mr. Trump and his companies about $2 billion since 1998, the only mainstream financial institution consistently willing to do business with Mr. Trump and his companies. At the time he became president, Mr. Trump owed the bank about $350 million, including on loans to buy and renovate the Doral golf resort near Miami and to develop a luxury hotel in the Old Post Office building in Washington.

Both properties are suffering in the economic shutdown. In response to Miami-Dade County’s rules, the Doral resort has ceased all operations, while the Washington hotel continues to operate, albeit with few guests and with its restaurant and bar closed. The Trump Organization rents the Washington property from the federal government, and the company had been soliciting bids from potential buyers for the lease, a process that is now on hold, The Washington Post reported.

Mr. Trump received the loans for those properties, as well as another related to his Chicago skyscraper, from 2012 to 2015. Because of his history of defaults and bankruptcies, Deutsche Bank insisted that Mr. Trump provide personal guarantees on those loans, meaning that the bank has recourse to his personal assets if he were to stop paying back the money.

Ever since Mr. Trump’s election, Deutsche Bank executives have been fretting about what would happen if he were to default, according to bank officials. Seizing the president’s personal assets would be an unattractive proposition. But opting not to collect on the loans would be the equivalent of an enormous financial gift to Mr. Trump, whose administration wields enormous power over the bank. Deutsche Bank’s operations in the United States are supervised by federal regulators, and the Justice Department has been conducting a criminal investigation of the bank.

The Trump International Golf Club in West Palm Beach, Fla., is on nearly 300 acres that the Trump Organization leases from Palm Beach County. Mr. Trump often frequents the golf course when he stays at his nearby Mar-a-Lago resort.

Gov. Ron DeSantis of Florida last month ordered restaurants, bars and golf courses, among other businesses, to be closed as the coronavirus descended on the state.

The Trump Organization reached out on multiple occasions last week to Palm Beach County to ask whether it expected the company to continue making the monthly payments of tens of thousands of dollars due under its long-term lease, according to people briefed on the discussions.

Mr. Raymundo, the Trump Organization executive, told county officials that the governor’s orders closing bars and restaurants had forced the golf club to cancel events and close some of its facilities. Mr. Raymundo didn’t respond to requests for comment.

He didn’t explicitly ask to delay or skip lease payments, but Palm Beach County officials interpreted his inquiries as an informal request.

The Trump Organization’s lease agreement with Palm Beach County, which dates from 1996, contains what is known as a “force majeure,” or “act of God,” provision. County officials are looking into whether the provision may allow the organization to delay lease payments because of the pandemic.

While businesses nationwide are seeking similar relief, Mr. Trump’s status as president means his company’s actions are freighted with potential conflicts of interest for lenders and landlords. At Deutsche Bank, for example, some executives have said they were worried about the possibility of retaliation by the Trump administration if they were ever to come into conflict with the president.

Mr. Trump has at times in the past tried to take advantage of crises to get out of his debts.

In November 2008, he owed hundreds of millions of dollars on a loan from Deutsche Bank that financed the construction of the Trump International Hotel & Tower in downtown Chicago. Mr. Trump told Deutsche Bank that he considered the financial crisis to be a contract-voiding “act of God.” He sued the bank, blaming it for the crisis and for engaging in predatory lending by trying to collect on the loan, and sought $3 billion in damages.

Lawyers for Deutsche Bank pointed out in court filings that at the same time that Mr. Trump was claiming that the financial crisis left him unable to keep up with loan payments, he had been boasting to the media about how his business was swimming in cash. The litigation was settled two years later, with Mr. Trump getting extra time to repay what he owed.

Sheelagh McNeill contributed research.



Source link

About The Author

Related posts

Leave a Reply